2018 (6) TMI 766 - AT - Central Excise

Tribunal Ruling: Classification of Ramco Products, Time-Bar Issue, Penalty Exemption

Madras Cements Ltd. and The Ramco Cements Ltd. Versus CCE Chennai-IV

The tribunal upheld the classification of 'Ramco Super Fine' as a non-refractory surfacing preparation, 'Ramco Super Plaster' as 'Other Cement,' and set ... Classification of goods - Ramco Super Fine - Ramco-Tile Fix - Ramco Super Plaster - Department took the view that the product “Ramco Super Fine” is wall based putty and appears to be more correctly classifiable under CETA 3214.00 upto 27.02.2015 and 3214.9090 thereafter - Held that:- As clarified in the HSN, the products of heading 32.14 are “preparations of widely differing composition which are essentially characterised by the uses to which they are put; these preparations are usually put up in a more or less pasty form and in general they harden after application; however, some are in solid or powder forms; the products of this heading are usually applied with a caulking gun, a spatula, a trowel, a plasterer’s float or similar tools”. It is interesting to note that while the appellants have been claiming that the product is a non-refractory preparation, by virtue of the HSN clarification, we find that even non-refractory preparations also fall under the ambit of both HSN 3214 and of CETA SH 3214 - the classification of the product ‘Ramco Super Fine’ under CETA SH 3214.00 upto 27-02-2005 and 32149090 thereafter upheld and also holding that the said product is required to be assessed to duty under Section 4A of the Central Excise Act, 1944. Classification of Ramco Tile Fix - Department took the view that the product Ramco-Tile Fix appears to be classifiable under 3506.00 of CETA upto 27.02.2005 and 3506.9999 thereafter - Held that:- The product appears to be a cement-based mastic having addition of polymers to lend adhesive properties which would possibly bring it within the ambit of CETA SH 32.14. However, since there is no such proposal made in the SCN and since the attempt of the department to classify it under CETA SH 35.06 has not found favour with us, we would only set aside that part of the impugned order which has ordered classification of “Ramco Tile Fix” under CETA SH 3506.00 upto 27.02.2005 and 3506.99.99 from 28.2.2005. Classification of Ramco Super Plaster–Plastering Compound - Department took the view that the product Ramco Super Plaster–Plastering Compound is classifiable under CETA 25232990 - Held that:- Evidently, not only is Ramco Super Plaster predominantly consisting of cement upto around 75%, but also, the product is projected as a superior substitute to cement for all plaster and mortar applications. No doubt the product may have better qualities than plain cement. Nonetheless there is no gainsaying that it is still predominantly cement only upto almost 75%. Further even the literature states that it “is used the same way cement is used - there is no infirmity with the conclusions of the adjudicating authority that ‘Ramco Super Plaster’ is nothing but a “value added cement” meriting classification as “Other Cement” in CETA sub heading 2523 2990. Hence that part of the impugned order confirming classification of “Ramco Super Plaster – Plastering Compound” under CETA sub heading 2523 2990. Penalty u/s 11AC - Held that:- There is no gainsaying that the entire dispute has arisen out of a difference in interpretation vis-a-vis the classification of the new products brought out by the appellant for specific usages. This being the case, there cannot be any allegation that appellants have evaded duty by way of fraud or mis-interpretation or misstatement or suppression of facts - penalty do not sustain. Appeal disposed off. Issues Involved:1. Classification of the products 'Ramco Super Fine,' 'Ramco Tile Fix,' and 'Ramco Super Plaster – Plastering Compound.'2. Demand of differential duty and imposition of penalties.3. Time-bar and limitation for issuing show cause notices.4. Applicability of penalties under Section 11AC of the Central Excise Act, 1944.Issue-wise Detailed Analysis:1. Classification of Products:Ramco Super Fine:The appellants argued that 'Ramco Super Fine' is a dry mix mortar classifiable under CETA SH 3824, claiming it is a cement mortar in powder form. The department classified it under CETA SH 3214.00 (up to 27.02.2005) and 3214.90.90 (thereafter), as a non-refractory surfacing preparation. The tribunal upheld the department's classification, noting that the product is marketed as a cement-based putty and fits the description of non-refractory surfacing preparations under HSN 3214.Ramco Tile Fix:The department classified 'Ramco Tile Fix' under CETA SH 3506 as a prepared adhesive. The appellants contended that it is a cement-based product with polymer additives, not a prepared adhesive. The tribunal found that the product is predominantly cement-based with minimal polymer additives and cannot be classified as an adhesive. The classification under CETA SH 3506 was set aside.Ramco Super Plaster – Plastering Compound:The department classified this product under CETA SH 2523 2990 as 'Other Cement.' The appellants argued for classification under CETA SH 38249090. The tribunal upheld the department's classification, noting that the product is predominantly cement (70-75%) and is used similarly to cement, despite its additional properties.2. Demand of Differential Duty and Imposition of Penalties:The tribunal ordered the reworking of duty liability based on the upheld classifications. For 'Ramco Super Fine,' duty assessment under Section 4A was upheld. For 'Ramco Tile Fix,' the classification under CETA SH 3506 was set aside, impacting the duty calculation. For 'Ramco Super Plaster,' the classification under CETA SH 2523 2990 was upheld.3. Time-bar and Limitation for Issuing Show Cause Notices:For Appeal No. E/475/2010, covering the period August 2004 to March 2009, the tribunal found that the show cause notice issued on 07.09.2009 was time-barred for the major period. The appellants had informed the authorities of their classifications in 2002, and the extended time limit invocation was not justified. Consequently, the demand for the period beyond the normal limitation was set aside.4. Applicability of Penalties under Section 11AC:The tribunal held that the dispute arose from a difference in interpretation of product classifications and did not involve fraud, misrepresentation, or suppression of facts. Therefore, penalties under Section 11AC were not imposable. All penalties imposed in the impugned orders were set aside.Conclusion:1. The classification of 'Ramco Super Fine' under CETA SH 3214.00 (up to 27.02.2005) and 3214.90.90 (thereafter) and its assessment under Section 4A was upheld.2. The classification of 'Ramco Tile Fix' under CETA SH 3506.00 (up to 27.02.2005) and 3506.99.99 (thereafter) was set aside.3. The classification of 'Ramco Super Plaster – Plastering Compound' under CETA SH 2523 2990 was upheld.4. The demand for the period beyond the normal limitation in Appeal No. E/475/2010 was set aside, and penalties under Section 11AC were not imposable.5. Duty liability in the remaining appeals will be reworked based on the classifications upheld/set aside. The MA filed in Appeal E/40531/2014 was disposed of as infructuous.